Nowadays our world is facing new problems caused by digitalization. Though, there are problems that must be solved as otherwise, they can cause lots of consequences that might turn us backward. The technologies we are using are amazing. They help us a lot in different spheres. You can work from home so as to get new hobbies and communicate. Amazing feeling to be alone and with many people at the same time. If you feel bored or would like to test your luck check the real-money online slots and try to win your jackpot. Our digitalization should bring us more benefits but with them, we got many financial issues. We are going to talk about the latest one which was discussed but unfortunately can be found more and more often everywhere.
Fight Against Poverty
Among the important discoveries of the Nobel laureate Michael Kremer, included in the general treasury of knowledge about the fight against poverty, is the theory of economic development with o-rings. The sealing ring, O-ring, is a cheap rubber part, the defect of which in 1986 killed the Space Shuttle Challenger and its entire crew. So the essence of Kremer’s theory is that in economic systems, even an insignificant element can lead to collapse. That’s why everything of quality people and companies with high potential will tend to a quality environment. And high-quality elements in a low-quality environment will be misplaced. Most modern economists agree that this model is the key to understanding international economic inequality.
This theory, in particular reality, proves that the modernization of production in lagging countries in order to become successful must necessarily take on a complex character. Otherwise highly qualified specialists from these countries will not be used. Kremer’s theory does an excellent job of explaining wage disparities across countries, regions, and industries.
Model of The Country
From this model, the following conclusion can be drawn. Workers performing the same task receive higher wages in a high-skilled firm than in a low-skilled firm. Where companies produce “simple” products for poor buyers, such companies simply do not need skilled, but that means “expensive” narrow specialists. Therefore, America gathers the most energetic and potentially the most promising workers from all over the world. Those left behind in a big city or a rich country will have to compete for a small salary with their own kind. That is a system requiring high specialization.
On the one hand, the richer a country or company, the more complex and expensive products they produce. Also, the more productivity and quality of work they expect from its employees at all levels. Such employees are a scarce resource and have hence high salaries.
On the opposite side are poor companies, with low expectations, low productivity, and their corresponding salaries. Moreover, low salaries solve a different problem. In this case, they serve as a signal to all “advanced” and “efficient” people. It means that you are not welcome here, you are not needed here.
The true level of attitude towards the employee and expectations from his work is the salary. The low level of the “minimum”, “median” and “average” wages is the best proof of the sad fact that we are dealing with a “simple” economy. The owners of which simply do not need skilled and smart people.